×

Disney is in talks with Hearst to sell off its interest in five European cable channels that are part of the larger A+E Networks joint venture between the companies.

Disney last week agreed to divest the channels as a condition of receiving approval for the 21st Century Fox transaction from the European Commission, the European Union’s executive arm. The regulatory review concluded that Disney would have too much market power in the lifestyle and factual programming arena by bringing Fox’s National Geographic Partners channels group together with its 50% ownership of A+E Networks.

Hearst is negotiating a buyout of Disney’s stakes in History, H2, Crime & Investigation, Blaze, and Lifetime channels serving the U.K., Italy, Germany, and Iberia. The transaction is small, described by one insider as insignificant to a company of Disney’s size and scope, and Hearst is the logical buyer. But completing an agreement, which could involve some other business dealings between Disney and Hearst, does remove one of the last hurdles to closing the mammoth, $71.3 billion acquisition. Disney is looking to bolster its IP vault and content engines with the addition of 20th Century Fox, FX Networks, Nat Geo, and Fox’s 30% stake in Hulu, giving Disney majority control of the streaming platform.

The A+E Euro outlets are well-established with a household reach in the tens of millions in the markets tabbed for divestiture. Blaze, which focuses on inspirational stories and the achievements of everyday people, reaches 20 million homes in the U.K. History and H2 reach more than 20 million households together in the U.K. Some of the channels have local partners in various markets, meaning Disney’s share is less than 50%.

At home, A+E Networks is enjoying renewed momentum after a long slump, with A&E and History returning to cable’s top 10 on the back of buzzy new unscripted entries, notably A&E’s “Live PD.” under the direction of CEO Paul Buccieri. He had been president of A+E Portfolio Group before being promoted in July after his predecessor, Nancy Dubuc, left to take the helm of Vice.

Disney is also preparing for the sale of the 22 regional sports networks that will come with the Fox transaction, which was a condition of merger approval from the Justice Department in the U.S. That is a much more significant deal valued in the $20 billion range. The jockeying for those channels is expected to heat up after the Thanksgiving holiday as the initial round of expressions of interest were submitted to bankers Allen & Company and JPMorgan Chase last week.

The New Fox entity that will emerge after the bulk of 21st Century Fox goes to Disney was among the entities expressing interest in the RSNs. That prompted some eyebrow-raising from industry insiders about Rupert Murdoch hatching a plan to buy the channels back at a discount. But a source close to the situation says it’s unlikely New Fox will make a serious bid for the channels.

The transaction on the A+E Networks channels could be the precursor to a larger conversation between Disney and Hearst about the company. There’s been speculation in recent years that Disney eventually plans to either consolidate the cable group or exit the joint venture. Disney and Hearst have been partners since the original A&E Network launched in 1984, followed in 1995 by the bow of History. NBC was an A+E partner until 2009 when the venture was restructured and Lifetime was also brought into the fold. Hearst also holds a 20% stake in Disney’s ESPN.

Reps for Hearst and Disney declined to comment.

(Pictured: History’s “Pawn Stars” franchise)